ESG strategy and oversight
in Indian boardrooms

IN COLLABORATION WITH

Diligent Institute

August 2023

Authors:

IOD Contributors: Lt. Gen. Surinder Nath, AVSM,PVSM, Pradeep Chaturvedi, Manoj K Raut, CS Sana Rehman, Laghima Sharma and Varshal Sood

Diligent Contributors: Dottie Schindlinger, Edna Twumwaa Frimpong, and Kira Ciccarelli

Download Full Report

Key Highlights of the Report:

How are boards connecting ESG with Corporate Strategy?
Board strategy for ESG integration
How are boards preparing for current or upcoming ESG regulation?

Outlook on ESG

Our survey results indicate that boards in India view ESG more in terms of opportunities than risks. Fifty percent of respondents indicated that they perceive ESG as an opportunity. Only 16.5% indicated that they see ESG as a risk.

Do leaders view ESG in terms of risk or opportunity?

Opportunity

Balance

Risk

50%

33.5%

16.5%

“ Adoption of ESG should become a way of life and in every action of good corporate citizens”

- Financial Consultant in an automotive industry,
IOD Member**

Should ESG factors be incorporated into security valuation?

8%Yes

92%No

92% of directors believe that ESG should be incorporated into to security valuation. Globally, this number was 57%.

Do ESG metrics positively influence stock performance?

64%Yes

34%Unsure

2%No

While approximately 64% of the respondents believe that incorporating ESG metrics has positively influenced their stock performance, a small percentage of respondents (2%) did not perceive any such impact. This demonstrates the growing confidence directors have in the benefits of ESG implementation.

How frequently do boards evaluate progress on ESG-related goals/strategies?

16%Do not evaluate progress on ESG

84%Evaluate progress on ESG

Key Findings (Indian Boardrooms)

50%

perceive ESG as more of an opportunity, compared to 56% in Europe and 30% in the US

16.5%

perceive ESG more as a risk, compared to 13% in Europe and 34% in the US

92%

believe that ESG should be incorporated into security valuation, in Europe, that percentage was 73%, US: 42%

24%

describe a lack of clarity as a major obstacle in ESG integration, 14% cite competing business or strategic interests, 13% are concerned about lack of allocated budget

27%

discuss their progress on ESG quarterly.Globally, this was 22%

61%

feel they spend the right amount of time discussing ESG in the boardroom, compared to 72% globally

49%

report publicly on ESG

7.69%

follow Business Responsibility and Sustainability Reporting (BRSR ) voluntarily

Who oversees the ‘E’ of ESG?

	Environmental related risks	Environmental business model risks	Environmental chain risks	Climate reporting
Full board	19%	23%	12%	21%
ESG committee	27%	17%	0%	18%
Risk committee	12%	17%	18%	0%

A majority of companies place the responsibility of overseeing the environmental component of ESG at the full board level. Globally, almost 50% respondents place the responsibility of ESG oversight at the full board level.

Who oversees the ‘S’ of ESG?

	Employee engagement	Human capital	Social supply chain risks	Public policy	Community relations
Full board	32%	36%	17%	49%	28%
ESG committee	11%	8%	11%	4%	14%
Senior management below the C Suite Level	24%	23%	22%	12%	18%

With respect to social metrics, the distribution of oversight responsibilities reveals a notable trend. While the majority of boards take on the responsibility at the full board level, there is a more diverse allocation of oversight among other entities such as the CEO and the Senior Management below the C-suite level. The involvement of ESG committee is also relatively common for oversight of social metrics.

Who oversees the ‘G’ of ESG?

	Board diversity recruitment / policy / strategy	Appointment and accountability of ESG issues to appropriate board committees	Bribery and corruption, political contributions
Full board	62%	44%	45%
ESG committee	3%	12%	3%
Senior management below the C Suite Level	7%	6%	10%

The governance component is primarily the responsibility of the full board according to our respondents. It is worth noting that the governance component is less frequently overseen by an ESG Committee compared to other entities.